I was home late last week relaxing on my sofa, giving my DVR a workout by catching up on all the TV I’ve missed out on recently, and came across a link that David Marine posted to the Coldwell Banker Facebook page titled, “Short Sales 101: Ins and Outs of Short Sales.” As a real estate rookie, I’ve heard a bit about short sales, pre-foreclosures, foreclosures, adjustable rate mortgages, REO properties and the like, but conversations on them sounded more like Morse Code or Klingon than English.
The interactive guide from the Associated Press does a great job of laying out the most basic and fundamental points of buying or selling a short sale property in laymen terms. In short, lenders resort to a short sale often times in hopes of avoiding foreclosure on a property where the owner can no longer make payments. Lenders typically receive less than what they had on the balance of the mortgage when they go down this road. I’m guessing the foreclosure process can at times be more costly than taking the slight hit upfront on a property via the short sale process.
“Short sales are a good deal but not a steal” and from what I’ve gathered, it can be complicated and not as finely structured as it would be if I were to look into buying a “regular” property in my local area. It might be particularly beneficial for a first-time homebuyer because we would typically not be in as much of a rush to hear whether an offer had been accepted because we wouldn’t also be selling our home concurrently.
It’s always best to talk to a local real estate agent about these types of properties and processes, but at least now I can come to the table with enough knowledge to ask important and informed questions. A few questions I might ask would be:
- Which process is more complicated: buying foreclosed or short sale properties?
- Would it be advisable to look into buying a foreclosed home as opposed to a short sale property if I were looking to garner the absolute best deal possible?
- What are the pros and cons of each?
- How much room would we have to negotiate with the lender? What role would the selling and buyers agent have?
- What if I put an offer on a short sale property and after a few months (does it take that long?) of not hearing back, I find the perfect home and wish to bid on that one? Am I still bound to my first offer?
Click the link below to poke around the interactive unit on coldwellbanker.com
(You’ll need to have Adobe Flash 10 installed on your computer in order to view the interactive unit)
Photo Courtesy of Nick Bastian